Quarterly report pursuant to Section 13 or 15(d)

Commitments and Contingencies

Commitments and Contingencies
3 Months Ended
Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Note 11 – Commitments and Contingencies
Drilling and Completion Commitments
As of March 31, 2023, we had contracts for two drilling rigs with remaining terms of less than two years.
Gathering and Intermediate Transportation Commitments
We have long-term agreements that provide us with field gathering and intermediate pipeline transportation services for a majority of our crude oil and condensate production in Lavaca and Gonzales Counties, Texas. We also have volume capacity support for certain downstream intrastate pipeline transportation. The following table provides details on these contractual arrangements as of March 31, 2023:
Description of contractual arrangement Expiration
of Contractual Arrangement
Gross Minimum Volume
Commitment (MVC)
Expiration of MVC
Field gathering agreement February 2041 8,000 February 2031
Intermediate pipeline transportation services February 2026 8,000 February 2026
Volume capacity support April 2026 8,000 April 2026
Each of these arrangements also contain an obligation to deliver the first 20,000 gross barrels of oil per day produced from Gonzales, Lavaca and Fayette Counties, Texas. For certain of our crude oil volumes gathered under the field gathering agreement, our rate includes an adjustment based on NYMEX WTI prices. As crude oil prices increase, up to a cap of $90 per bbl, the gathering rate escalates pursuant to the field gathering agreement.
During the 12-month period ended March 31, 2023 and excluding the potential impact of the effects of price escalation from commodity price changes, if any, the minimum fee requirements attributable to the MVC under the gathering, transportation and marketing agreements are as follows: $10.5 million for the remainder of 2023, approximately $13.9 million per year for 2024 through 2025, $7.8 million for 2026, $3.8 million per year for 2027 through 2030 and $0.6 million for 2031.
During the three months ended March 31, 2023 and 2022, we delivered more than the required 20,000 gross barrels of oil per day and recorded total expense of $10.0 million and $10.2 million, respectively, for contractual fees in connection with these arrangements.
Crude Oil Storage
As of March 31, 2023, we had access to up to approximately 180,000 barrels of dedicated tank capacity for no additional charge at the service provider’s CDP facility, in Lavaca County, Texas through February 2041. In addition, we had access for an additional 70,000 barrels of tank capacity at the CDP on a month-to-month basis, which can be terminated by either party with 45 days’ notice to the counterparty. Costs associated with this monthly agreement are in the form of a monthly fixed rate short-term lease and are charged as incurred on a monthly basis to GPT in our condensed consolidated statements of operations.
Other Agreements
We have a long-term dedication of certain specific leases under a crude purchase and throughput terminal agreement through 2032. Under the agreement, we have rights to transfer dedicated oil for delivery to a Gulf coast terminal in Point Comfort, Texas or oil may be transferred at alternate locations to third parties with a terminal fee.
We have agreements that provide us with field gathering, compression and short-haul transportation services for our natural gas production and gas lift for our hydrocarbon production under various terms through 2039.
We also have agreements that provide us with services to process our wet gas production into NGL products and dry, or residue, gas. Several agreements covering the majority of our wet gas production extend beyond three years, including one agreement that extends into 2029.
Legal, Environmental Compliance and Other
We are involved, from time to time, in various legal proceedings arising in the ordinary course of business. While the ultimate results of these proceedings cannot be predicted with certainty, our management believes that these claims will not have a material effect on our financial position, results of operations or cash flows. As of March 31, 2023 and December 31, 2022, we had an estimated reserve of approximately $0.1 million for certain claims made against us regarding previously divested operations included in Accounts payable and accrued liabilities on our condensed consolidated balance sheets.
As of March 31, 2023 and December 31, 2022, we had AROs of approximately $9.0 million and $8.8 million, respectively, attributable to the plugging of abandoned wells.
Additionally, we have entered into certain contractual arrangements for other products and services and have commitments under information technology licensing and service agreements, among others.